Developed nations spent more on fossil fuel subsidies in 2023 than promised climate finance: Report

Developed countries spent $378 billion in 2023 on subsidies for fossil fuels, surpassing the $300 billion annual climate finance they have pledged to developing nations by 2035 to combat climate change.

Fossil subsidies are government intervention that provides benefits or preferences for the production or consumption of fossil fuels, often making them cheaper or more accessible compared to alternative energy sources.

According to data from the International Institute for Sustainable Development (IISD), 23 developed nations, obligated under the UN Climate Convention to help developing countries with climate finance, spent $378 billion on fossil fuel subsidies.

This highlights a major disparity, with the developed nations prioritising supporting fossil fuel support over helping the developing world combat climate change.

A study conducted by IISD showed that government support for fossil fuels reached at least $1.5 trillion in 2023, marking the second-highest annual total on record after 2022 when the Russia-Ukraine conflict drove a global energy crisis.

The 10 largest subsidisers of fossil fuels in 2023 included Russia, Germany, Iran, China, Japan, India, Saudi Arabia, the Netherlands, France, and Indonesia.

The group of developed nations committed to providing $300 billion to developing countries by 2035 at the UN climate conference in Azerbaijan’s Baku. This is significantly lower than what the Global South actually needs—$1.3 trillion annually to cope with the rapidly warming world.

India, Bolivia, Nigeria, and Malawi, speaking on behalf of 45 least developed countries (LDCs), criticised the new climate finance package. India argued that $300 billion is insufficient to implement the national climate plans known as Nationally Determined Contributions (NDCs), pointing out that when adjusted with inflation, the current package falls short of the previous goal of $100 billion agreed in 2009.

IISD researchers said that the spending by developed nations on fossil fuel subsidies shows that while funds are available, they are being "directed in the wrong direction". They suggested that fiscal space freed up through fossil fuel subsidy reforms could be redirected to meet climate finance commitments.

Fossil fuels—coal, oil, and gas—are the largest contributors to climate change, accounting for over 75% of global greenhouse gas emissions and nearly 90% of all carbon dioxide emissions.

While many governments have taken measures to reduce their carbon footprint, many policies still encourage the production and consumption of fossil fuels, like subsidies.